The EFFECT worksheet function for Excel returns the effective annual interest rate.
EFFECT worksheet function
Below is the syntax of the EFFECT function.
Here are the arguments of the EFFECT function.
|Nominal_rate||The nominal interest rate.|
|Npery||The number of compounding periods per year.|
Note: For one-year, there are 12 months. Therefore, we entered 12 for Npery.
Note: In Excel, =EFFECT(10%,12)*100% is the way you would enter the formula directly. Notice that we multiply the results of the EFFECT function by 100%. Although not necessary, it makes the result look better.